Security Concerns Boost Computer-Safety Firms' Results

Mon Jan 21 07:32:56 EST 2002

http://interactive.wsj.com/archive/retrieve.cgi?id=SB1011563728915181760.djm&template=printing.tmpl

January 21, 2002

Tech Center

Nationwide Concerns About Security Boost
Computer-Safety Firms to Strong Results

By ANN GRIMES
Staff Reporter of THE WALL STREET JOURNAL

Safety concerns buoyed sales for several computer-security companies that
reported strong quarterly results last week, with three boosting financial
estimates.

Network Associates Inc., Santa Clara, Calif., reported a narrower
fourth-quarter loss of $3.5 million, or two cents a share, compared with a
loss of $147.2 million, or $1.07 a share, a year earlier. Revenue rose to
$259.2 million from $58.8 million.

Excluding results for its McAfee.com Corp. holding, plus charges for
amortization, stock-based compensation, restructuring, interest expense on
convertible debt, write-downs on strategic investments, income taxes
related to capital gains and redemption of debt, the company said earnings
per share were 23 cents, far higher than the eight cents a share analysts
expected. (Those items are considered part of normal business expenses
under standard accounting procedures.)

During the quarter, the company saw demand for its software rise among
international clients and shipped its first antivirus product for small and
medium-size businesses. Network Associates also raised its guidance for the
first quarter and the full 2002 calendar year. The company anticipates
annual revenue (excluding McAfee.com) in the $860 million-to-$890 million
range and earnings per share in the range of 42 cents to 47 cents, above
analysts' expectations of 38 cents.

In 4 p.m. trading on the Nasdaq Stock Market Friday, Network Associates
rose $2.10, or 7.9%, to $28.81.

Guidance also went up at McAfee.com last week. The company said it expects
earnings per share of between 25 cents and 28 cents for 2002 on revenue
between $80 million and $90 million, up from analysts' expected 22 cents a
share on revenue of $84 million.

On Wednesday, McAfee, Sunnyvale, Calif., reported fourth-quarter net income
of $904,000, or two cents a share, compared with a net loss last year of
$7.9 million, or 18 cents a share. Revenue jumped 53% to $18.6 million. In
4 p.m. Nasdaq trading Friday, McAfee was down $1.35, or 5.8%, at $21.73.
The stock fell Thursday as well.

Excluding charges related to stock-based compensation and amortization of
goodwill, items that are considered part of doing business under standard
accounting, the company said earnings per share were nine cents, up from
the five cents a share that analysts expected.

Earlier in the week, security software maker Symantec Corp. also raised its
guidance for the rest of fiscal 2002. The company expects to report
earnings before items of 66 cents to 74 cents on revenue of $285 million to
$295 million, compared with analysts' expectations of earnings per share of
66 cents on revenue of $281.9 million.

The Cupertino, Calif., company, best known for its Norton antivirus
software, reported break-even fiscal third-quarter earnings of $100,000
compared with net income of $13.9 million, or 21 cents a share, for the
same period a year earlier. But it said per-share earnings would have been
78 cents, excluding acquisition charges, a number that beat analysts'
expectations of 64 cents a share. Symantec's revenue rose 32% to $290.2
million from $219.3 million.

In 4 p.m. trading Friday on the Nasdaq Stock Market, Symantec rose 47 cents
to $75.82.

Israeli security-software maker Check Point Software Technologies Ltd. was
an exception as it posted fourth-quarter profit that dropped 5% to $77.1
million, or 30 cents a share, from $81 million, or 31 cents, a year
earlier. Its revenue fell 13% to $122.5 million from $140.4 million. Check
Point expects first-quarter revenue and earnings to be flat or slightly
down.

Write to Ann Grimes at ann.grimes at wsj.com1
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